Goldman Sachs Shares Plunge After CEO Lloyd Blankfein Hires Famous Defense Lawyer

News Blankfein Hires Prominent Defense Attorney Send GS Stock Tumbling, Gold Futures Soaring Over $1900 (ZeroHedge, Aug 22, 2011):

For a perfect ending to a schizophrenic day we go to Reuters which has just reported that Goldman’s CEO has hired high profile defense attorney Reid Weingarten. The market is not waiting to find out the details, and GS stock is tumbling. What has alos happened is that gold futures punched through $1900 for the first time ever. $2000 is the next target, and will likely be taken out within the week.

From Reuters:

Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter.

Blankfein, 56, is in his sixth year at the helm of the largest U.S. investment bank, which has spent two years dodging accusations of conflicts of interest and fraud.

The move to retain Weingarten comes as investigations of Goldman and its role in the 2007-2009 financial crisis continue.

“Why do you bring in someone like that?” said the source, who was not authorized to speak publicly. “It says one thing: that they’re taking it seriously.”

Blankfein has not been charged in any civil or criminal case, and it was not immediately clear why he hired Weingarten.

David Wells, a spokesman for Goldman, declined to comment.

Weingarten did not respond to requests for comment.

Something big is about to hit the tape, and this time Goldman won’t be able to put the whole blame on a twenty-year old Frenchman.

UPDATE: Goldman says Blankfein hired the lawyer in conjunction with the DOJ lawsuit, according to CNBC’s Kate Kelly. The firm also said it’s common for a CEO who’s about to be interviewed to hire counsel.

Goldman Sachs TANKS After CEO Lloyd Blankfein Hires Famous Defense Lawyer (Business Insider, Aug. 22, 2011):

Is the Goldman Sachs CEO facing a new lawsuit?

The market seems to think so. Goldman Sachs just tanked in minutes before the close after news that Lloyd Blankfein hired a lawyer famous for defending vilified execs. It’s back up a bit since dropping over 5%, but the news is still concerning.

It’s unclear whether the lawyer is for him, Goldman Sachs, or both, but Goldman Sachs’s CEO Lloyd Blankfein hired Reid Weingarten, a high profile defense attorney who says “I’m used to these monstrously difficult cases where everybody hates my clients,” according to Reuters.

Reuters says the hire might have something to do with accusations of Blankfein’s committing perjury. Or something else:

One former federal prosecutor, who was not authorized to speak publicly, said Blankfein may have hired outside counsel after receiving a request from investigators for documents or other information.

A snapshot of Weingarten’s resume:

  • Defending Bernard Ebbers, the former chief of WorldCom who was accused of conspiracy
  • Defending Roman Polanski
  • Defending former Enron chief accountant Richard Causey
  • Defending the ousted Tyco International counsel Mark Belnick
  • Defending the former Rite Aid Corp. exec Franklin C. Brown

What else could this mean? It could be no big deal at all. Blankfein might simply want outside counsel for advice. Goldman might be paying for the lawyer. It’s no secret that Goldman and Blankfein are facing a number of lawsuits. Or it could say something about Blankfein’s future at Goldman.

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